if you owe the tax man, can they force you to sell your house?

wlfy2004

If you owe the tax man unpaid personal taxes, can they force you to sell your house to repay the due amount?

CLAPTON

best to give us a little background

wlfy2004

a colleague of mine was using an EBT scheme to receive payment for contract work and it transpires that it was not within tax regulations and he has to repay the tax outstanding on the amount he received via the EBT. He hasn't got the monies to do this and he has been told they could force him to sell his home to repay the amount. is this true and if so is there anything he can do to get around this?

trevormax

HMRC are doing a lot these days to help people who are having trouble paying tax they owe. I would suggest he contact his tax office and try to sort something out with them. They could set up a payment plan for example which he could pay off monthly, or if the amount he owes is not too much they can reduce his tax code for next year and he will just pay more tax on his earnings.

e.g. if he owes 500 pound, they will reduce his tax code next year by 2,500 assuming he is a basic rate tax payer, or 1250 if he is a higher rate tax payer.

wlfy2004

hi Trevormax - thanks for the swift response..... the tax owed i think is in the region of £80,000!!! Hence the sale of the house option... he is in a right state and is freaking out....

mtem74

Tell him to speak to the taxman first. There maybe other ways

wlfy2004

i have just spoken to my friend and he is thinking of taking his name off the deeds of the house and therefore leaving the house in the sole name of his wife! If the taxman did come after his assets, would this prevent them from forcing him to sell his house?

Thanks

skylight

The tax man may not come after the house, but HMRC are one of the few creditors who will take people to court to bankrupt them. Then the official receivers can still come after the house even if the name was transferred recently - they can reverse it. It all depends on equity and other stuff though.